New Delhi: The Income-tax Bill, 2025 was tabled in Parliament today towards achieving “comprehensive simplification of the Income-tax Act, 1961”. The Finance Ministry explained that the Bill is a step in simplifying the language and structure of the Income-tax Act, 1961.
The simplification exercise is guided by the following three core principles:
- Textual and structural simplification for improved clarity and coherence. It stated that simplified language would make the law more accessible.
- No major tax policy changes to ensure continuity and certainty.
- No modifications of tax rates, preserving predictability for taxpayers.
The Ministry elaborated that for this a three-pronged approach was adopted:
- Eliminating intricate language to enhance readability.
- Removing redundant and repetitive provisions for better navigation.
- Reorganizing sections logically to facilitate ease of reference.
Consultative and Research-Based Approach
The Government ensured widespread stakeholder engagement, consulting taxpayers, businesses, industry associations, and professional bodies. Out of 20,976 online suggestions received, relevant suggestions were examined and incorporated, where feasible. Consultations were held with industry experts and tax professionals and simplification models from Australia and the UK were studied for best practices.
Outcomes of the Simplification Exercise
Quantitative Impact
The review has led to a substantial reduction in the Act’s volume, making it more streamlined and navigable. Key reductions are summarized below:
| Item | Existing Income-tax Act, 1961 | Proposed in the Income-tax Bill, 2025 | Change (Reduction/Addition) |
| Words | 512,535 | 259,676 | Reduction: 252,859 words |
| Chapters | 47 | 23 | Reduction: 24 chapters |
| Sections | 819 | 536 | Reduction: 283 sections |
| Tables | 18 | 57 | Addition: 39 tables |
| Formulae | 6 | 46 | Addition: 40 formulae |
Qualitative Improvements
-
- Simplified language, making the law more accessible.
- Consolidation of amendments, reducing fragmentation.
- Removal of obsolete and redundant provisions for greater clarity.
- Structural rationalization through tables and formulae for improved readability.
- Preservation of existing taxation principles, ensuring continuity while enhancing usability.
“The Income-tax Bill, 2025 reflects the Government’s commitment to enhancing ease of doing business by providing a tax framework that is simple and clear,” the Finance Ministry stated.
– global bihari bureau
